Complaint No C18074 [2017] NZREAA 85 (25 September 2017)

Last Updated: 14 December 2017

Before the Complaints Assessment Committee

Complaint C18074

In the matter of Part 4 of the Real Estate Agents Act 2008

Licensee 1 (xxxxxxxx) Licensee 2 (xxxxxxxx)

Decision to take no further action

25 September 217

Members of Complaints Assessment Committee: CAC 403

Chairperson: Susan D'Ath Deputy Chairperson: Amelia Bardsley Panel Member: Sandra Wilson

Complaints Assessment Committee

Decision to take no further action

1. The Complaint

1.1. On 16 February 2017 the Real Estate Agents Authority (the Authority) received a complaint against Licensee 1 and Licensee 2 from the Complainants.

1.2. Licensees 1 and 2 are a licensed salesperson under the Real Estate Agents Act 2008 (the Act)

and engaged by the Agency.

1.3. The complaint relates to the sale of a property (the Property).

1.4. The complaints made were as follows:

(a) that Licensee 1 misrepresented the roof as new, despite the Complainants telling her it was not new;

(b) Licensee 1’s failure to obtain the signature of the Property owner on the listing and sale and purchase agreements;

(c) Licensee 1’s failure to act on the Complainant’s instructions to not contact their mother; (d) Licensee 2’s failure to adequately supervise Licensee 1; and

(e) the failure of both licensees to act in the best interest of the Complainants.

1.5. The Complainants asked that the complaints be remedied by:

(a) $15,000 compensation which they had been ordered to pay by the Disputes Tribunal; (b) censure of the Licensees for failing to act on instructions not to contact the vendor;

(c) censure and disciplinary action against Licensee 1 for not getting the correct signatures on the listing and sale and purchase agreements; and

(d) censure of Licensee 2 for failing to adequately supervise Licensee 1.

1.6. Both Licensees responded to the complaints. Licensee 1 stated that the Complainants told her that the Property had been re-roofed. Licensee 2 supported Licensee 1’s version of the events and said both Licensees were led to believe the Property had been reroofed.

2. What we decided

2.1. On the 11 April 2017 Complaints Assessment Committee (the Committee) considered the complaint and decided to inquire into it under section 79(2)(e) of the Act.

2.2. On 30 August 2017 the Committee held a hearing on the papers and considered all the information gathered during the inquiry.

2.3. The Committee has decided to take no further action on the complaint against either

Licensee.

2.4. This decision was made under section 89(2)(c) of the Act. The decision was also made with reference to the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012 specifically Rule 10.7.

3. Our reasons for the decision

3.1. The Committee concluded that there was not sufficient evidence before us to support the Complainants assertion that they told Licensee 1 at the time of listing that the Property had been re-roofed.

3.2. What physical evidence there is available to the Committee suggests that the first time the question of whether the roof had been refurbished rather than replaced was raised between the parties was by way of text messages the day the sale agreement was due to be confirmed. This is denied by the Complainants.

3.3. The Complainants saw and signed off on the proposed marketing material for the Property

which included the words “rewired and reroofed”.

3.4. The Complainants took a different position before the Disputes Tribunal.

3.5. There are no independent witnesses.

3.6. The obligation rests on the Complainants to prove their case and they have failed to do so.

3.7. As to the other complaints, failure to obtain the signature of the vendor, failure to act on instructions, failure to supervise and failure to act in best interests of the Complainants, we found no evidence to support these claims and that no further action should be taken.

Background

3.8. The Property was owned by one of the three Complainants who is an elderly lady residing in a different location. The listing and sale of the Property were handled on her behalf by her son and daughter-in-law who are the other two Complainants.

3.9. The Property was marketed for sale as having been “rewired and re-roofed”.

3.10. Shortly before confirmation of the sale questions were raised by the purchaser as to the actual position regarding the roof. It emerged that the roof was not new or recently installed. The roof was “decramastic style” metal tiles installed over an old iron roof at some point in the past. It had been refurbished by cleaning and re-surfacing in May 2011.

3.11. As a result, the purchaser took a Disputes Tribunal case against the vendor of the Property.

The Tribunal found in favour of the purchaser and awarded them $15,000. The purchaser is pursuing the balance of the cost of re-roofing the Property from the Agency and the Agency is seeking this amount from the vendor/Complainants.

4. Our findings

Misrepresentation of the roof

4.1. It is undisputed that the Property was marketed for sale on the basis that it had been re- roofed when it had not. The Committee accepts that the evidence shows the roof was metal tile apparently installed over an earlier iron roof. It had been re-roofed in the past but not recently. The tiles had been repaired and refurbished in 2011.

4.2. We think that a reasonable person seeing the words “re-roofed” would expect that to mean

that the property had a new roof installed in the recent past.

4.3. The Complainants maintain that at the time the Property was listed for sale and at various points thereafter they told Licensee 1 that the roof had been refurbished and not that it had been re-roofed. They have produced a number of text messages between them and Licensee

1 which they say support their position. They have also produced witnesses who they say were present at meetings when the roof was discussed.

4.4. Licensee 1 in contrast maintains that they did tell her it had been re-roofed and that she had no knowledge that it had not been reroofed until the day confirmation of the contract was due when the matter was raised by the purchaser. She points to her exchange of messages with the Complainants that day as being proof this was the first she knew about it. She has denied that earlier discussions about the roof took place as described by the Complainants.

4.5. Licensee 2 says that he was present at a meeting on 15 April 2016 at the Property when the Complainants stated that the Property was fully rewired and re-roofed. He says that the Complainants were asked to provide the paperwork to prove this and the Complainants stated it was stored in New Plymouth.

4.6. The Committee has been unable to reconcile the parties’ statements. The Complainants are adamant they told Licensee 1, the Licensees are adamant that they did not.

4.7. There is little documentary evidence to support either party. We note that the Complainants maintained a different position at the Disputes Tribunal than that taken before our Committee. At the Disputes Tribunal they said that it was not misleading to describe the roof as new because it had been substantially repaired and refurbished. Before the Committee they have taken the position that they disclosed the refurbishment to Licensee 1 and did not claim that it was a new roof.

4.9. The advertising material was prepared by Licensee 1 but was seen and signed off on by the Complainants. They submit that they specifically told Licensee 1 the marketing material was wrong to say “re-reroofed” and she told them it was fine (or something to that effect).The Committee has struggled to understand how, if Licensee 1 had been told by the Complainants (as they maintain) that the roof had been repaired or refurbished, she would include such an unequivocal statement in the advertising and why, on seeing it the Complainants did not seek a change.

4.10. The witnesses that the Complainants have put forward are friends or family members and their statements as to when and where conversations took place has changed during the course of the investigation. We do not think that a great deal of weight can be put on those statements which rely on their memories of conversations which took place some time ago and which in some instances they were not a participant in but say they overheard.

4.11. The roof was described in the listing as “decramastic”. “Decramastic” was a brand name used for a metal roofing product popular from the 1970’s and 1980’s. The product was metal with

a profile resembling tiles. If the roof was the original “decramastic” product then we would have expected an experienced licensee to realise it could not have been recently re-roofed. The Committee has seen the photographs used in the marketing of the Property which are still available in the internet. The roof is clearly visible in more than one photograph and would have been visible to a person looking at the Property from those angles. The roof

appears to us to be of the “decramastic” type with the scalloping pattern associated with that

product and appears to have been repainted or recoated.

4.12. There are however a number of metal roofing products currently on the market which have a tile profile and resemble the “decramastic” product. If the roof has been recently repainted or refurbished then we think it is possible that a reasonable licensee exercising care and skill may fail to detect that it was not a new roof, particularly if they had been told that it was.

4.13. The Complainants have not produced any evidence to show that either of the Licensees inspected the roof from the outside and in the absence of evidence this cannot be taken further.

4.14. In any complaint to the Authority it is incumbent upon the Complainant to substantiate their complaint. They must substantiate their complaint by providing evidence that shows “ it is more likely than not” that what they submit occurred, did occur. In this instance, the Committee has formed the opinion that the Complainant has failed to provide sufficient evidence to show it is “more likely than not” that they advised Licensee 1 that the roof had only been refurbished, not re-roofed.

Failure to obtain vendors signature

4.15. The evidence shows that the vendor had authorised the other two Complainants to act on her behalf in the listing and the sale. The vendor had not apparently granted a Power Of Attorney. The Committee considers that it would have been best practice for Licensee 1 to have either asked for confirmation that the vendor had appointed an Attorney or to have obtained her signature on the listing.

4.16. We do accept however that all parties, the vendor and the other Complainants were at the time happy with the arrangement and that the vendor had authorised the other Complainants to act as her authorised agent. Licensee 1 was present when a telephone call was made to the vendor and spoke with her to confirm that she wanted to list the Property for sale and that her son would be handling it for her. Licensee 1 also spoke with Licensee 2 about the matter.

4.17. We do not think the failure to obtain the signature on this occasion reaches the threshold at which warrants a finding against Licensee 1 should be made.

Failure to act on instructions not to contact vendor

4.18. Licensee 2 contacted the vendor prior to the hearing before the Disputes Tribunal. Licensee 2 says that he called her to discuss the issues about the roof on 3 or 4 occasions. He maintains he was unaware of her age and health status and did not speak rudely or disrespectfully but says that it was clear she had heard the version of events from the other Complainants and distrusted him. When contacted by the other Complainants and asked not to call her he complied.

4.19 We do not think this constituted a breach of the Code. There was an upcoming Disputes Tribunal hearing concerning the vendors Property and it was the vendor who was the client of the Agency, Licensee 2 was entitled to call her to discuss the matter.

Failure to act in the Complainants best interests

4.20. One of the Complainants was the vendor of the Property. She was the client to whom their duty was owed.

4.21. The Complainants have not pointed to any particular act or omission as indicative of the failure to act in her best interests. On the issues which arose because of the roof then Licensee 1 maintains she proceeded on the basis of statements made to her by two of the

Complainants. The Committee having found that there is insufficient evidence to support that complaint we likewise find that this allegation has not been proved by the Complainants.

Supervision

4.22. Licensee 2 holds a salespersons licence and was not responsible for the supervision of

Licensee 1.

4.23. Licensee 2 has some 30 years of experience in the industry and there is no evidence before the Committee which suggests that Licensee 1 was not adequately supervised at the time.

4.24. This allegation is dismissed.

Summary

4.25. There is not sufficient evidence before us which would support the allegation that Licensee

1was were aware of the true condition of the roof and failed to disclose it.

4.26. The Committee cannot reconcile the opposing positions of the parties in the absence of evidence.

4.27. The burden of proving their complaints falls on the Complainants and the Committee finds that the evidence available does not do so.

4.28. Accordingly the Committee is satisfied that no further action should be taken in respect of the complaints.

5. Your right to appeal

5.1. If you are affected by this decision of the Committee, you may appeal in writing to the Real Estate Agents Disciplinary Tribunal (the Tribunal) within 20 working days after the date of this decision (Section 111).

5.2. For further information on filing an appeal, read Guide to Filing an Appeal at Ministry of Justice-Tribunals (www.justice.govt.nz/tribunals).

6. Publication

6.1. At the Committee’s discretion, the decision will be published without the names or identifying details of the Complainant (including the address of the Property), the Licensee and any third parties.

6.2. The Authority will publish the Committee’s decision after the period for filing an appeal has ended, unless the Tribunal receives an application for an order preventing publication. The Authority will not publish the Committee’s decision until the Tribunal has made a decision on the application.

6.3. Publishing the Committee’s decision supports the purpose of the Act by ensuring that the disciplinary process remains transparent, independent and effective. The Committee also considers that publishing this decision helps to set industry standards and that is in the public interest.

Signed

Susan D'Ath

Date: 25 September 2017

Appendix 1: Relevant provisions

The Real Estate Agents Act 2008 provides:

89 Power of Committee to determine complaint or allegation

(1) A Committee may make 1 or more of the determinations described in subsection (2) after both inquiring into a complaint or allegation and conducting a hearing with regard to that complaint or allegation.

(2) The determinations that the Committee may make are as follows:

(a) a determination that the complaint or allegation be considered by the Disciplinary

Tribunal:

(b) a determination that it has been proved, on the balance of probabilities, that the licensee has engaged in unsatisfactory conduct:

(c) a determination that the Committee take no further action with regard to the complaint or allegation or any issue involved in the complaint or allegation.

(3) Nothing in this section limits the power of the Committee to make, at any time, a decision under section 80 with regard to a complaint.

111 Appeal to Tribunal against determination by Committee

(1) A person affected by a determination of a Committee may appeal to the Tribunal against a determination of the Committee within 20 working days after the date of the notice given under section 81 or 94.

(2) The appeal is by way of written notice to the Tribunal of the appellant's intention to appeal, accompanied by—

(a) a copy of the notice given to the person under section 81 or 94; and

(b) any other information that the appellant wishes the Tribunal to consider in relation to the appeal.

(3) The appeal is by way of rehearing.

(4) After considering the appeal, the Tribunal may confirm, reverse, or modify the determination of the Committee.

(5) If the Tribunal reverses or modifies a determination of the Committee, it may exercise any of the powers that the Committee could have exercised.

The relevant provisions from the Real Estate Agents Act (Professional Conduct and Client Care) Rules

2012. are:

Rule 10.7 A licensee is not required to discover hidden or underlying defects in land but must disclose known defects to a customer. Where it would appear likely to a reasonably competent licensee that land may be subject to hidden or underlying defects4, a licensee must either—

(a) obtain confirmation from the client, supported by evidence or expert advice, that the land in question is not subject to defect; or

(b) ensure that a customer is informed of any significant potential risk so that the customer can seek expert advice if the customer so chooses.